Summersville Production Company had the following projected information for the current year: $$\begin{array} { l l r }
\text { Selling price per unit } & \$ 150 \
\text { Variable cost per unit } & \$ 90 \
\text { Total fixed costs } & \$ 300,000
\end{array}$$
What is the contribution margin ratio?
A)0.400
B)1.667
C)2.500
D)0.600

Question

Summersville Production Company had the following projected information for the current year: $$\begin{array} { l l r } 
\text { Selling price per unit } & \$  150 \
\text { Variable cost per unit } & \$  90 \
\text { Total fixed costs } & \$ 300,000
\end{array}$$
What is the contribution margin ratio?
A)0.400
B)1.667
C)2.500
D)0.600

Quizplus · Accepted Answer

The contribution margin ratio is calculated by dividing the contribution margin by the selling price per unit. The contribution margin is the difference between the selling price per unit and the variable cost per unit. In this case, the contribution margin is $150 - $90 = $60. The contribution margin ratio is $60 / $150 = 0.400.

Summersville Production Company Had the Following Projected Information for the Current